Please ensure Javascript is enabled for purposes of website accessibility
Free Article Join Over 1 Million Premium Members And Get More In-Depth Stock Guidance and Research

Why RPC Stock Is Slumping Today

By Matthew DiLallo - Jul 24, 2019 at 11:59AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The oil and gas services company disappointed investors.

What happened

Shares of RPC ( RES 1.71% ) declined as much as 10.5% by 11 a.m. EDT on Wednesday. The main driver of the slide in the oil and gas service company's stock was its lackluster second-quarter earnings report.

So what

RPC's revenue plunged 23% year over year during the second quarter, to $358.5 million. Several factors impacted results, including lower pricing and activity levels, as well as an unfavorable materials mix within the company's pressure pumping service line. Because of that, earnings declined from $0.28 per share in the year-ago period to $0.03 per share, missing analysts' expectations by $0.02.

Oil workers working on a rig.

Image source: Getty Images.

While the U.S. rig count declined 5.2% from the first quarter due to slumping oil prices, RPC's "activity levels improved compared with the first quarter because of seasonal improvement and more consistent customer activity levels," according to CEO Richard Hubbell. However, he noted that "results continue to be impacted by intense competition and our customers' uncertainty regarding their near-term operations." Hubbell cautioned, "As we begin the third quarter, there are indications that drilling and completion activities will decline during the second half of 2019."

Now what

The oil market continues to be challenging for smaller oil-field service companies like RPC. Oil prices have been very volatile in the past year -- twice plunging more than 20% -- which has unsettled oil and gas producers. Their response has been to reduce spending on new wells, which is squeezing the oil-field service market. While oil prices have bounced back a bit in recent weeks, oil companies don't yet have the confidence to increase spending. Because of that, the oil-field service market could remain under pressure for the rest of the year.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

RPC, Inc. Stock Quote
RPC, Inc.
RES
$4.17 (1.71%) $0.07

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
624%
 
S&P 500 Returns
141%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 12/05/2021.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Our Most Popular Articles

Premium Investing Services

Invest better with the Motley Fool. Get stock recommendations, portfolio guidance, and more from the Motley Fool's premium services.